Commentary: Massachusetts liquor law shake-up taps into Darwinism

The Republican file photo | Don TreegerA customer looks over the selection of Champagne at a liquor store recently. While consumers and big grocery and liquor chains will gain from the changes to the state's liquor laws, it will be harder to succeed as a traditional corner package store.

This legislative session Beacon Hill is doing more than just afflicting the state with three casinos. It also is on the cusp of revolutionizing the retail liquor industry in Massachusetts. It is almost as big of a story as the casinos, but has received virtually no attention.

A post-Prohibition-era law limited the number of licenses one person could own to three, creating an army of small-business package store proprietors. In lifting that cap next year to five, and ultimately to nine by 2020, the state is setting the stage to winnow the number of little players in the state’s retail liquor industry and provide more heft to the supermarkets and other big-box retailers that want to sell more alcohol.

Former Boston Business Journal editor and now correspondent Jay Fitzgerald reported this story last week, and it’s an important one because it ultimately will affect almost everyone who buys beer, wine or booze in Massachusetts. As of this writing, the bill sits on Gov. Patrick’s desk, and it’s likely he will sign it, as it has the endorsement of treasurer Steve Grossman after Sen. Michael Rodriques carefully steered a compromise between the package store owners and the big food companies.

There are clear winners – the grocery purveyors who can now more easily move into alcohol sales, traditionally a high-margin item. Successful liquor store chains will now be able to expand. It will create more competition among the larger food retailers. And, it’s likely the consumer will benefit as the bigger players buy in more bulk and battle for market share.

It’s the marginal liquor store owner who will lose out, depending on how much the demand for retail liquor licenses will push up prices. It will be harder, but not impossible, to make it as a traditional small packie. The average consumer will have more access to buy alcohol where he or she usually buys other things.

Rather than face another referendum question from the food lobby, the Massachusetts Package Stores Association cautiously brokered this deal, one that phases in change rather than just having it drop all at once. It introduces more economic Darwinism into the retail liquor industry, removing the long-held protections that kept mom-and-pop package store owners afloat, while placing a premium on the value of their liquor licenses.